The number of consumers on Britain’s high streets is in “terminal decline” as shopping habits change fundamentally, raising the prospect of more retail failures this year.
Speaking to City A.M. after the demise of suits-specialist Austin Reed was confirmed yesterday, Diane Wehrle from top retail analyst Springboard said: “We’re no longer going to see increases in footfall again. It’s in terminal decline.”
She predicted that there could be one or two more insolvencies in the industry this year, adding: “The most vulnerable sector is fashion at the moment.” In April, Austin Reed and BHS both crashed into administration. Yesterday, it emerged that Austin Reed’s stock and name had been bought by Edinburgh Woollen Mill, but it had not taken on the 120 stores. Around 1,000 jobs will be lost as a result. BHS is in a race against time to find a buyer.
Helen Dickinson, chief executive of industry body the British Retail Consortium (BRC), said: “The big thing that has come out of the insolvencies is whether or not retailers are connected with their customers, and are meeting their constantly changing demands.”
She added: “Footfall has been falling for a number of years now and I think the trend of slow or virtually no retail sales growth, and the fact that people continue to change the way that they shop, is here to stay.”
Shoppers are after a seamless connection between online and physical stores, she said. They also want to have a good experience when they go shopping. Springboard's Wehrle said: “That’s where retail is facing serious challenges. You either compete on price, or, like Apple, offer real consumer experience. The M&S instore experience is mundane. You don’t walk in and think it's an amazing place to be. It hasn’t changed in 20 or 30 years.”
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Maureen Hinton, retail analyst at Conlumino, said the shake up taking place on high streets is likely to play out in what becomes of Austin Reed’s property portfolio.
She said: “I think you can’t just assume all the Austin Reed Stores will turn into clothing stores. They might become food services or coffee shops, because they’re not particularly big stores. People visit the high street for different reasons now; people want experiences.”
In a sign of further pressure on the sector, figures out today from BRC-Nielsen show that there is no end in sight for shop price deflation. In particular, non-food items suffered, with deflation at 2.7 per cent.